Diversification playing major role for development of Schmidt and Sons

May 1, 2002
THE SONS in Schmidt and Sons Inc know the meaning of diversification. Keith Schmidt and Henry Schmidt Jr have expanded their Gonzales, Texas, business

THE SONS in Schmidt and Sons Inc know the meaning of diversification. Keith Schmidt and Henry Schmidt Jr have expanded their Gonzales, Texas, business from supplying farms and convenience stores with petroleum products to building storage tank infrastructures and providing truck-to-truck refueling. Keith oversees the distribution side of the business, Schmidt and Sons, while Henry manages the construction company, Hesco Maintenance Co.

“We saw that we could provide many services to different customers such as construction, mining, large manufacturing plants, and refineries,” says Keith. “As those parts of the business developed, we came in contact with more companies that needed bulk oil storage tanks — and someone to build and install them. However, petroleum distribution remains the company's chief revenue source.”

Today's diversification is a reflection of the business acumen of the brothers' parents, Henry and Dorothy Schmidt Sr, who started the business in 1960 as a Mobil branded marketer supplying service stations and farms. The sons began observing the operation soon after they were born, having a front seat from their playpens in the office.

Before long, the Schmidts were building and installing storage tanks. Although the company grew at a steady pace, it was not without setbacks. Fire destroyed the property in 1972, and Henry Sr died suddenly in 1988. Fortunately the sons had been involved in the company since they were old enough to take on responsibility, so the succession moved smoothly.

By 1990, an outside salesman had been hired to widen the lubricants market. Originating in the Texas Rio Grande Valley, the lubricant business quickly expanded into the Houston and Dallas markets. With the growth, the Schmidts established a presence in Houston. Two years after the lubricant introduction, the Schmidts had formed the direct truck-to-truck fueling service, doing business as Texas Night Fuels. Among customers are delivery companies and automobile dealers. The decision to establish the night fueling service enabled the company to maximize utilization of all its trucks.

Company services

With diversification, Schmidt and Sons operations have spread across the state. Trucks are based in Amarillo, Midland/Odessa, Abilene, Wichita Falls, Lubbock, Tyler/Longview/Kilgore, Waco/Temple/Kileen, Lufkin, Nacogdoches, Beaumont/Orange, Houston, Austin, and San Antonio. The fleet includes 33 tankwagons and two tank trailers.

Schmidt and Sons is a distributor for ExxonMobil, supplying branded diesel and gasoline for retail sales. As a distributor for Valvoline, the company provides motor oils, filters, and chemicals to automobile dealers and fast-lubrication facilities. Lubricants also are distributed for Chevron and Fina to industrial and construction companies. In addition, the company delivers gasoline and diesel to convenience stores as a distributor for Coastal Refining and Marketing.

At the headquarters in Gonzales, above-ground storage capacity totals 80,000 gallons. An additional 80,000-gallon storage capacity is available for lubricants.

Because of diversification and statewide service, the company outsources maintenance for its fleet. Preventive maintenance includes 15,000-mile oil and filter changes for the Freightliner and Kenworth tractors and Freightliner, Mack, and International tank trucks.

Most tankwagons have four-compartment tanks, but Keith says he expects to change the specification to five-compartment tanks because of the growing need to haul additional products. Some trucks are equipped with 4,500-gallon tanks. Smaller units have tanks with capacities ranging from 3,980 gallons to 1,610 gallons. The range of capacity serves a variety of customer demands.

Two four-compartment tankwagons dedicated to Valvoline distribution have a van body extension that is used to haul drums. The truck adaptation was designed by Schmidt and again suits the company niche for specialized service. “It really attracts attention,” says Todd Madden, transportation director. “Other drivers tell our drivers they have never seen anything like it.”

For a time, the trucks carried several different logos and were painted various colors. To achieve a unified identify and improve the appearance of the vehicles, a new livery was designed by Big Truck Graphics in Dallas, Texas.

The tankwagons are supplied by Oilmen's Tank Truck Inc, Spartanburg, South Carolina, and Youngs Tank Inc, Boyd, Texas. They are equipped with Emco Wheaton bottom-loading adapters, Betts valves, Scully overfill prevention systems, Blackmer pumps, and Hannay hose reels. One truck has a Liquid Controls meter.

The two 9,350-gallon tank trailers are from Fruehauf and are equipped with Emco Wheaton bottom-loading adapters, Betts valves, Scully overfill prevention systems, and Blackmer pumps.

The Schmidts are especially active in promoting safety awareness with the drivers, who are assigned both dedicated routes and vehicles. The company requires a driver and an assistant on each tank truck for the night truck-to-truck refueling service so that one person is at the truck while the other is at the end of the hose during deliveries. Having two people per truck also acts as a hedge against driver fatigue.

“In a typical night, we may complete as many as 200 truck refuelings,” says Madden. “It is essential that our safety procedures during these operations are in place.”

Drivers not only receive company training, but complete instruction required by the petroleum terminals. Schmidt uses consultants to administer classroom training that includes an orientation on company policies, Department of Transportation regulations, defensive driving, and hazardous materials handling. After the classroom training is completed, new hires receive on-the-job instruction from veteran drivers.

Drivers play a significant role in the company's marketing efforts because they see new opportunities on their routes for both the distribution and construction divisions.

The Schmidts are mounting a marketing effort to expand the night fueling business. “Delivery trucks have to be refueled at night,” says Keith. “By using our service, their drivers don't have to take the time to fill the tanks at a convenience store. Our service also eliminates the need for storage tanks at customer locations, a significant environmental consideration for them.”

Diversification has proven a successful venture for Schmidt and Sons. Having an anchor in each large city across Texas places the company in the driver seat to continue expanding its assets.

About the Author

Mary Davis